Computer-implemented method and system for determining a reduced insurance premium

ABSTRACT

A system for determining a reduced insurance premium includes at least one computer and a processor. The system receives a no-lapse discount request relating to a no-lapse period implemented in respect of a policy of a client. The system receives and/or accesses policy data which includes client data and non-client data relevant to the policy. A processor calculates a premium which covers a cost of risk and a cost of expenses associated with the policy and allows for a predefined profit allocation. The processor calculates the premium based on the policy data and on the assumption that the policy will not be cancelled or allowed to lapse during the no-lapse period. The cost of expenses and the predefined profit allocation for the policy are kept unchanged relative to another policy of the same type issued by the insurer, but in respect of which a no-lapse period does not apply.

This application claims priority to South African patent applicationnumber 2020/05734, filed on 16 Sep. 2020.

FIELD OF THE INVENTION

The invention relates to a computer-implemented method of determining areduced insurance premium. The invention also relates to a system fordetermining a reduced insurance premium.

BACKGROUND TO THE INVENTION

The insurance industry makes extensive use of cross-subsidies. Onespecific type of cross-subsidy centres around policy cancellations.Typically, a client with an insurance policy is required to pay a higherpremium than that which is technically required to cover them in orderto account for the fact that other clients are cancelling theirpolicies. The reasoning behind this is, in simple terms, as follows:when a client cancels their policy, the insurer is losing out onpremiums that they expected to earn and that would have been used tocover their expenses. As a result of losing out on these premiums, theinsurer loads (increases) a client's premium in an attempt to accountfor this behaviour.

This means that clients may be paying significantly more each monthowing to a factor that is completely outside of their control: otherclients cancelling their policies. The Inventors' research andexperience have revealed that the global insurance industry is plaguedwith these archaic cross-subsidies. In the life insurance industry, inparticular, this is one of the issues that is contributing to theso-called “life insurance gap” in terms of which many individualsworldwide are not covered or not adequately covered.

There is clearly a need to eliminate or reduce these cross-subsidies andthereby enable clients to access more cover for the same premium (or thesame cover for a lower premium).

However, the Inventors have found that the technical systems currentlyused by insurers to calculate premiums and manage policies are deficientin that they are configured to rely on cross-subsidies whenautomatically calculating, processing and managing policy related data.In other words, even if a client has no intention of cancelling a policyor allowing it to lapse, the computer system used by the insurertypically still calculates the premium as if there is a probability thatthis will happen. As such there is a technical problem with knowninsurance systems. Embodiments of the present invention aim to provide atechnical solution capable of addressing the above issue, at least tosome extent.

SUMMARY OF THE INVENTION

In accordance with a first aspect of the invention, there is provided acomputer-implemented method of determining a reduced insurance premiumassociated with a policy issued to a client by an insurer, the methodcomprising:

-   -   receiving, by at least one computer, a no-lapse discount request        or a no-lapse discount confirmation originating from the client,        wherein the request or confirmation relates to a no-lapse period        implemented in respect of the policy;    -   receiving and/or accessing, by the at least one computer, policy        data which includes client data and non-client data relevant to        the policy; and    -   calculating, by a processor associated with the at least one        computer, a premium which covers a cost of risk and a cost of        expenses associated with the policy and allows for a predefined        profit allocation, wherein the processor calculates the premium        based on the policy data and on the assumption that the policy        will not be cancelled or allowed to lapse during the no-lapse        period, and wherein the processor is configured to calculate the        premium such that the cost of expenses and the predefined profit        allocation for the policy are kept unchanged relative to another        policy of the same type issued by the insurer, but in respect of        which a no-lapse period does not apply, thereby allowing the        premium to be reduced relative to a premium associated with the        other policy; and    -   generating, by the at least one computer, output indicative of        the calculated premium and transmitting the output to a        communications device associated with the client.

The no-lapse discount request or no-lapse discount confirmation may besent to the at least one computer from the communications device of theclient.

The no-lapse period may be a fixed period, e.g. a year, wherein theclient has agreed not to cancel the policy or allow the policy to lapseduring that period and/or has agreed to a penalty being applied inresponse to a cancellation or lapsing during the period.

The calculated premium may apply only to the no-lapse period. The methodmay include a further step of re-calculating the premium insubstantially the same manner for a subsequent period if the clientagrees to a further no-lapse period. This step may include updating thepolicy data, cost of risk, cost of expenses and/or predefined profitallocation and re-calculating the premium accordingly, i.e. using theupdated policy data, cost of risk, cost of expenses and/or profitallocation (or a predefined profit allocation) and re-performing theabove steps.

The method may thus be carried out iteratively in order to calculate areduced premium or discount at every required point in time usingdifferent risk assumptions, economic assumptions, lapse rateassumptions, expense assumptions, and the like, at each of those pointsin time.

In some embodiments, instead of or in addition to calculating thepremium, the processor may be configured to calculate a discount whichcan be offered to the client if the no-lapse period is applied. Thisdiscount may be taken relative to the premium associated with the otherpolicy in respect of which a no-lapse period does not apply.

The processor may be configured to implement an algorithm which utilisesfactors including one or more of the client's age and time untilretirement (which is a proxy for the benefit term remaining), cost ofexpenses, a relevant interest rate structure and lapse and claimsexperience, to solve for the discount that can be offered to the clientduring the no-lapse period assuming no cancellation or lapsing, subjectto the abovementioned further constraints.

The method may include generating, by the at least one computer, outputindicative of one or both of the calculated premium or the discountassociated with the calculated premium, and transmitting the output to acommunications device associated with the client.

The method may include receiving or determining, by the at least onecomputer, a cover amount associated with the policy. The cost of riskmay be associated primarily or exclusively with the cover amount.

As alluded to above, the policy data may include data relating to lapseand claims experience. The processor may be configured to take intoaccount changes, over time, in at least one client experience indicatorof the insurer based on the issuing of a plurality of similar policiesincorporating no-lapse periods, when calculating the premium.

The client experience indicators may include indicators of lapseexperience, cancellation experience, mortality experience and/ormorbidity experience. The processor may be configured to analyse pastexperience data relating to the client experience indicator/s and futureexperience data relating to expected future changes in the clientexperience indicator/s in order to calculate the premium. The experiencedata may relate to instances, levels or rates of policy lapses, policycancellations, client mortality and/or client morbidity, or data derivedtherefrom.

The policy may include, but is not limited to, one or more of: lifecover, disability cover, income protection and/or illness cover.

In accordance with a second aspect of the invention, there is provided asystem for determining a reduced insurance premium associated with apolicy issued to a client by an insurer, the system comprising at leastone computer and a processor, the system being configured to:

-   -   receive a no-lapse discount request or a no-lapse discount        confirmation originating from the client, wherein the request or        confirmation relates to a no-lapse period implemented in respect        of the policy;    -   receive and/or access policy data which includes client data and        non-client data relevant to the policy; and    -   calculate, by the processor, a premium which covers a cost of        risk and a cost of expenses associated with the policy and        allows for a predefined profit allocation, wherein the processor        calculates the premium based on the policy data and on the        assumption that the policy will not be cancelled or allowed to        lapse during the no-lapse period, and wherein the processor is        configured to calculate the premium such that the cost of        expenses and the predefined profit allocation for the policy are        kept unchanged relative to another policy of the same type        issued by the insurer, but in respect of which a no-lapse period        does not apply, thereby allowing the premium to be reduced        relative to a premium associated with the other policy; and    -   generate, by the at least one computer, output indicative of the        calculated premium and transmit the output to a communications        device associated with the client.

In accordance with a third aspect of the invention, there is provided acomputer program product for determining a reduced insurance premium,the computer program product comprising at least one computer-readablestorage medium having program instructions embodied therewith, theprogram instructions being executable by at least one computer to causethe at least one computer to carry out the method substantially asdescribed above. The computer-readable storage medium may be anon-transitory storage medium.

BRIEF DESCRIPTION OF THE DRAWINGS

The invention will now be further described, by way of example, withreference to the accompanying drawings. In the drawings:

FIG. 1 is a schematic illustration of an embodiment of a systemaccording to the invention;

FIG. 2 is a flow diagram illustrating certain steps and processes in anexemplary method according to the invention; and

FIG. 3 is a block diagram of an exemplary computer system capable ofexecuting a computer program product to provide functions and/or actionsaccording to at least some aspects of the invention.

DETAILED DESCRIPTION WITH REFERENCE TO THE DRAWINGS

The following description is provided as an enabling teaching of theinvention, is illustrative of principles associated with the inventionand is not intended to limit the scope of the invention. Changes may bemade to the embodiments depicted and described, while still attainingresults of the present invention and/or without departing from the scopeof the invention. Furthermore, it will be understood that some resultsor advantages of the present invention may be attained by selecting someof the features of the present invention without utilising otherfeatures. Accordingly, those skilled in the art will recognise thatmodifications and adaptations to the present invention may be possibleand may even be desirable in certain circumstances, and may form part ofthe present invention.

Embodiments of the present invention provide a computerised systemconfigured to enable clients to be “locked” into a reduced/lowerinsurance premium for a particular period if they believe that thepolicy associated with the premium will not be cancelled or allowed tolapse during that period.

Embodiments of the invention leverage advanced algorithms which addressissues in the technical systems currently being used by many insurers.In particular, these advanced algorithms are configured to calculate adiscount that an insurer can afford to provide for the client in eachperiod, taking into account a number of factors, such as expenses andpast and future expected experience of the life insurance book (amongothers). These techniques will become more readily apparent from thedescriptions below.

FIG. 1 shows a remotely accessible server (hereinafter “the server 110”)of an insurer 100. Insurance clients 130, 132, 134, 136 (includingpotential clients) are able to communicate with the insurer 100, e.g.via a suitable website or mobile application or other channels such ase-mail, in order to transmit information to and receive information fromthe server 110. It will be appreciated that these communications may beeffected for various purposes and over any suitable communications link,such as the Internet 150.

For purposes of this specification, the clients 130, 132, 134, 136communicate with the insurer 100 in order to obtain quotes for andacquire (enter into agreements for) insurance products/policies, such as(but not limited to) life insurance and disability insurance. Theclients 130, 132, 134, 136 may also periodically communicate with theinsurer 100 to update certain data relating to their policies, e.g.provide updated personal and financial information on an annual basis.The clients 130, 132, 134, 136 may also communicate with the insurer 100for the purpose of entering into “no-lapse discount”agreements/policies, as will become apparent from the furtherdescriptions below.

The clients 130, 132, 134, 136 may make use of any suitablecommunications devices in order to communicate with the insurer 100, andthe client devices 140, 142, 144, 146 (mobile phones and personalcomputers with suitable connectivity) are shown as examples in FIG. 1 .At least some aspects of the invention may also be implemented withoutrequiring such a connection 150 between a client and the insurer 100,e.g. a client (not shown) may travel to a physical branch of the insurer100 or meet with a financial advisor and provide the necessary inputdata to the insurer 100 at the branch or with the financial advisor,allowing cover, premiums and discounts to be calculated and adjusted asdescribed in more detail below.

Typically, an insurance platform including a server like the server 110in FIG. 1 may communicate with a large number of clients and thirdparties. However, for ease of reference and to illustrate aspects of theinvention, an insurance policy interaction/transaction between theclient 130 and the insurer 100 will be described below and referencewill thus be made only to that particular client 130.

The server 110 may take various forms: it may include one or morecomputing devices and may be in a single location, distributed acrossvarious locations, hosted in a cloud-based environment, or combinationsthereof.

The server 110 includes a number of functional or logical components(referred to as “modules” below): a client data module 111, an economicdata module 112, a policy benefits module 113, a regulatory data module114, a client experience data module 115, an insurer-specific datamodule 116, a processor 117 (or multiple processors), and an outputmodule 118. The server 110 may, in practice, include many otherfunctional/logical components, but the above modules 111-118 are focusedon herein, again, to illustrate aspects of the invention. Theconfiguration and functionality of the modules 111-118 are described inmore detail with reference to the flow diagram 200 in FIG. 2 below.

The server 110 may also typically include, or be communicatively coupledto, a number of databases such as a client and policy database 120 withdata internal to the insurer (e.g. client and policy data) 100 and anexternal database 122 from which the insurer 100 draws external data,e.g. economic indicators, regulatory data, and the like.

The server 110 is specifically configured to implement an algorithmwhich calculates a premium discount (or a reduced premium that could becharged) for the client 130 at different points in time in their policythrough allowing no cancellation or lapses to maintain the expensecoverage and profit allowance balance (while a premium discount has beengiven) relative to any other life policy to which the discount does notapply. Preferably, the discount provided is independent of whether thespecific client 130 had the discount in the past or what the policycomposition of the client 130 was in the past.

Turning now specifically to FIG. 2 , which illustrates an examplemethodology, at a first stage 202, the client data module 111 receivesclient input data. This may include data such as age, number ofdependents, retirement age, occupation, gross salary, etc. This may bereceived from the client 130 and/or from other sources and/or theinsurer 100 may already have some or all of the data in its database120.

Then, at stage 204, the economic data module 112 receives or accessesthe relevant economic data. This may include data such as a risk-freerate, relationship between asset return and risk-free rate, impliedinflation over time, and the like.

At stage 206, the policy benefits module 113 receives or accesses thedetails of the benefits/cover required by the client 130. This includesa cover amount and may include other policy benefits. In this example,the client 130 has agreed to a “no-lapse discount”, which means that theclient 130 has requested a reduced premium in exchange for agreeing notto cancel or otherwise allow the policy to lapse (or agreeing to someform of penalty in the case of a lapsing/cancellation). The “no-lapsediscount” only applies to a specific, fixed period, which in thisexample is one year.

At stage 208, the regulatory data module 114 assesses regulatoryconsiderations such as tax which would impact the finances of the client130. The module 114 may also access insurance-specific regulatory data,e.g. reserving requirements.

The client experience data module 115 and the processor 117 analyse datarelating to client experience at stage 210. The client experience datamay include experience indicators, which may include indicators of lapseexperience, cancellation experience, mortality experience and/ormorbidity experience. The processor 117 may be configured to analysepast experience data relating to the client experience indicator/s andfuture experience data relating to expected future changes in the clientexperience indicator/s in order to calculate the premium.

Then, at stage 212, insurer-specific data is accessed by theinsurer-specific data module 116. This may be considerations specific tothe insurer 100 such as absolute profit, profit emergence, expensesincurred, and the like.

At stage 214, the processor 117 then determines the reduced premium, ora discount that can be offered to the client 130 relative to a normalpremium, based on a computerised algorithm applied to the abovementioneddata, and suitable output is provided to the client 130 via the outputmodule 118.

In this example, the algorithm uses factors including the client's ageand time until retirement (which is a proxy for the benefit termremaining), expenses incurred on a policy, the relevant interest ratestructure and lapse, mortality and morbidity experience, to essentiallysolve for the discount that can be given to the client 130 for thefollowing 12 months assuming no cancellation or lapsing, while keepingthe expense coverage and profit allowance balance unchanged relative toa policy of the insurer 100 without the no-lapse discount.

This algorithm allows the insurer 100 to charge a premium that betterrepresents a client's true risk (when viewed from a lapse point of view)for a given period (12 months in this case), which results in a lowerpremium. This may be advantageous to the client 130 as it results in afar more accurate and cost effective pricing methodology and alleviatesor even eliminates lapse-related cross-subsidies (possibly to a greaterextent over time).

Importantly, the algorithm does not rely on charging higher premiums insubsequent years (relative to a similar policy to which the discount hadnot applied) to fund the reduction in premium. Instead, the processor117 is configured to calculate the discount that can be offered for thenext year which allows the insurer 100 to maintain the expense coverageand profit allowance as would be experienced for a policy to which thediscount does not apply.

If, for some reason, the client 130 does cancel the policy or it lapsesduring the one-year period, the insurer 100 may trigger a penalty agreedupon in advance with the client 130 (see stage 216 in FIG. 2 ). Forinstance, the penalty may be in the form of a cancellation fee (e.g. onemonth's premium) or a double premium upfront with the additional premiumforfeited if the policy is cancelled/lapses. The pricing system need notnecessarily be employed to determine the penalty. However, thealgorithm/processor 117 may be configured to calculate discounts whileensuring that even if the client 130 cancels their policy, expensecoverage and profit allocation would not be jeopardized in the currentcycle (period) relative to a policy which has not selected the discountand cancels at the same point in time.

At the end of the fixed period during which the no-lapse discountapplied, at stage 218, the insurer 100 may engage with the client 130 orvice versa to establish whether a further fixed period with a no-lapsediscount is sought by the client 130. If not, it will be appreciatedthat the insurer 100 may simply carry on charging the client 130 apremium calculated in a conventional manner (stage 220) withoututilising the techniques described herein. If the client 130 does wishto continue with the no-lapse discount, at stage 222, the server 110adjusts the client information as required and then calculates a newdiscount/reduced premium for the subsequent fixed period, e.g. this maybe done at each policy anniversary with the new discount/reduced premiumthen applying for the next year.

In order to illustrate certain aspects of the invention in more detail,specific, non-limiting examples are provided below, again with referenceto the client 130. The South African Rand (ZAR) is used as an exemplarycurrency and the time value of money is ignored for the sake ofsimplicity, i.e. to make the examples easier to understand.

Scenario 1:

In a first scenario, it is assumed that the client 130 is aged 64 withone year until retirement. The client 130 wishes to take out a lifeinsurance policy to provide protection against loss of income(protection for the client 130 against disability and protection fortheir dependants against death).

As a highly simplified example, it is assumed that the risk cost for theamount of cover required is R100 for every month the cover is providedand that expenses of R20 are incurred every month the policy is active.R110 is incurred independent of how long the policy remains active(upfront costs) and profit of R110 is allowed for. The policy isexpected to remain active for 11 months.

In the above scenario, the monthly premium required to ensure that theupfront expenses are recouped and the desired profit is made over theexpected duration of the policy is R140, with the calculation shown inbrackets (R100+R20+R110/11+R110/11). The monthly premium usingconventional techniques would thus be R140. Conventional insurers'technical systems are typically configured to automatically do the abovecalculation and are thus deficient in that they are not able to considera “no-lapse discount”.

Now it is assumed that the same client 130 is given the option of a“no-lapse discount”. In other words, the client 130 is given the optionto enter into an agreement where they forego the right to cancel theirpolicy during the year (and/or are willing to pay a penalty in the eventthat they wish to cancel their policy during the year), the premiumrequired to ensure that the expense coverage and predefined profitallocation is maintained would be R138.33, with the calculation shown inbrackets (R100+R20+R110/12+R110/12), as the two R110 values would bedivided by 12 instead of 11 as the policy is now expected to remainactive for the whole year. This results in a reduced premium of R138.33or a premium discount of R1.67 per month.

Scenario 2:

In a second scenario, it is assumed that the client 130 is aged 63 withtwo years until retirement (i.e. the same expected retirement age of65). The client 130 wishes to take out a life insurance policy toprovide protection against loss of income, as described above.

It is assumed that the risk cost and expenses incurred per month are thesame as in Scenario 1 (R100 and R20 respectively), but that the requiredprofit until retirement (i.e. over the 2 years) is now R160 and initialexpenses incurred are R160 (incurred for a policy with a potential termof 2 years).

The calculation of the premium works similarly as in Scenario 1, but forpolicies that are in force at the end of the year, it is known that thenext year would contribute R110 to expense and R110 to profit and thereis a 8.33% chance that the policy would not remain in force until theend of the year (i.e. 91.66% chance that the policy remains in force andthe insurer 100 receives that value). Again, the policy is expected toremain active for 11 months. In order to ensure that upfront expensesare recouped and profit is made, the premium would be R130.76, with thecalculation shown in brackets(R100+R20+(R160−R110*91.66%)/11+(R160−R110*91.66%)/11). Conventionalinsurers' technical systems are typically configured to automatically dothe above calculation and are thus deficient in that they are not ableto consider a “no-lapse discount”.

Now it is assumed that the same client 130 is given the option of a“no-lapse discount”. In such a case, the insurer 100 has R110 profit andR110 expenses to work with (whether or not they enter into the agreementagain in a year's time) with a 100% chance and the premium would beR128.33, with the calculation shown in brackets(R100+R20+(R160−R110)/12+(R160−R110)/12).

The algorithm/s employed by the server 110, e.g. by way of the processor117, is/are configured to perform this process iteratively in order tocalculate the discount at every required point in time using differentrisk assumptions, economic assumptions, lapse rate assumptions, expenseassumptions, etc. at each of those points in time.

Additionally, it should be noted that the value of the profit allocationand expense coverage are impacted by various factors which influencepremium calculation, as already mentioned above. Combining these, thealgorithm solves for the premium or discount as any of the factors usedto determine premiums change.

Embodiments of the invention thus provide a computerised, technicalinsurance product and system solution providing numerous advantages.Some of these advantages have already been identified above, and othersare described below.

As explained above, the technical systems currently used by insurers tocalculate premiums and manage policies are often deficient in that theyare configured to rely on cross-subsidies when automaticallycalculating, processing and managing policy related data. This technicalproblem is solved by embodiments of the invention as the systemdescribed herein is specifically configured to eliminate reliance oncross-subsidies.

The research conducted by the Inventors has shown that embodiments ofthe invention can help clients receive a lower premium both upfront andover time and create a more sustainable life insurance industry,especially since the discount is not based on metrics or engagementoutside of the life policy itself. More specifically, embodiments of theinvention do not require external engagement in any program or thepurchase of additional products from which profit/expense allowance isshared to make up for any shortfall on the product to which the discountis applied.

Some insurers have implemented “reduced premium” products in the market,but many of those are based on engagement in some underlying program oruse of other products offered by these insurers falling outside of theambit of the life policy. In these cases, expense coverage and profitallowance on the “reduced premium” policies may differ from the otherpolicies of the insurer. In contrast, embodiments of the invention allowthe insurer to maintain expense coverage and profit allowance relativeto policies to which the discount does not apply.

The techniques employed may also ensure that an insurer does not have apreference between policies where the no-lapse discount applies andpolicies where it does not apply, as both policies present substantiallythe same economic value to the insurer. This may obviate the need topenalise clients at some later point in time in the form of higherpremiums than they would have paid had they not chosen the discount inorder to ensure financial viability.

Embodiments of the invention allow insurers to charge the appropriatepremiums to clients based on different client needs, e.g. a particularclient may know that there will not be a need to lapse/cancel within agiven timeframe and that client may be charged accordingly, while adifferent charge is applied to others.

While the examples above have focused on the life insurance industry, itwill be appreciated that embodiments of the invention may be appliedbroadly across the insurance industry.

The techniques described above may be implemented in or using one ormore computer systems, such as the computer system 300 shown in FIG. 3 .The computer system 300 may be or include any suitable computer orserver. The server 110 may include such a computer system 300. Thecomputer system 300 may be implemented in distributed cloud computingenvironments where tasks are performed by remote processing devices thatare linked through a communications network. In a distributed cloudcomputing environment, program modules executed by the computer system300 may be located both locally and remotely.

In the example shown in FIG. 3 , the computer system 300 has features ofa general-purpose computer. These components may include, but are notlimited to, at least one processor 302, a memory 304 and a bus 306 thatcouples various components of the system 300 including the memory 304 tothe processor 302. The bus 306 may have any suitable type of busstructure. The computer system 300 may include one or more differenttypes of readable media, such as removable and non-removable media andvolatile and non-volatile media.

The memory 304 may thus include volatile memory 308 (e.g. random accessmemory (RAM) and/or cache memory) and may further include other storagemedia such as a storage system 310 configured for reading from andwriting to a non-removable, non-volatile media such as a hard drive. Itwill be understood that the computer system 300 may also include or becoupled to a magnetic disk drive and/or an optical disk drive (notshown), and/or any other suitable type of drive, for reading from orwriting to suitable non-volatile media. These may be connected to thebus 306 by one or more data media interfaces.

The memory 304 may be configured to store program modules 312. Themodules 312 may include, for instance, an operating system, one or moreapplication programs, other program modules, and program data, each ofwhich may include an implementation of a networking environment. Thecomponents of the computer system 300 may be implemented as modules 312which generally carry out functions and/or methodologies of embodimentsof the invention as described herein. It will be appreciated thatembodiments of the invention may include or be implemented by aplurality of the computer systems 300, which may be communicativelycoupled to each other.

The computer system 300 may operatively be communicatively coupled to atleast one external device 314. For instance, the computer system 300 maycommunicate with external devices 314 in the form of a modem, keyboardand display. These communications may be effected via suitableInput/Output (I/O) interfaces 316.

The computer system 300 may also be configured to communicate with atleast one network 320 (e.g. the Internet or a local area network) via anetwork interface device 318/network adapter. The network interfacedevice 318 may communicate with the other elements of the computersystem 310, as described above, via the bus 306.

The components shown in and described with reference to FIG. 3 areexamples only and it will be understood that other components may beused as alternatives to or in conjunction with those shown.

Aspects of the present invention may be embodied as a system, methodand/or computer program product. Accordingly, aspects of the presentinvention may take the form of hardware, software and/or a combinationof hardware and software that may generally be referred to herein as“components”, “units”, “modules”, “systems”, “elements”, or the like.

Furthermore, aspects of the present invention may take the form of acomputer program product embodied in one or more computer-readablestorage medium having computer-readable program code embodied thereon. Acomputer-readable storage medium may, for instance, be an electronic,magnetic, optical, electromagnetic, infrared, or semiconductor system,apparatus, or device, or any suitable combination of the above. In thecontext of this specification, a computer-readable storage medium may beany suitable medium capable of storing a program for execution or inconnection with a system, apparatus, or device. Programcode/instructions may execute on a single device, on a plurality ofdevices (e.g., on local and remote devices), as a single program or aspart of a larger system/package.

The present invention may be carried out on any suitable form ofcomputer system, including an independent computer or processorsparticipating on a network of computers. Therefore, computer systemsprogrammed with instructions embodying methods and/or systems disclosedherein, computer systems programmed to perform aspects of the presentinvention and/or media that store computer-readable instructions forconverting a general purpose computer into a system based upon aspectsof the present invention, may fall within the scope of the presentinvention.

Chart(s) and/or diagram(s) included in the figures illustrate examplesof implementations of one or more system, method and/or computer programproduct according to one or more embodiment(s) of the present invention.It should be understood that one or more blocks in the figures mayrepresent a component, segment, or portion of code, which comprises oneor more executable instructions for implementing specified logicalfunction(s). In some alternative implementations, the actions orfunctions identified in the blocks may occur in a different order thanthat shown in the figures or may occur concurrently.

It will be understood that blocks or steps shown in the figures may beimplemented by system components or computer program instructions.Instructions may be provided to a processor of any suitable computer orother apparatus such that the instructions, which may execute via theprocessor of the computer or other apparatus, establish or generatemeans for implementing the functions or actions identified in thefigures.

1. A computer-implemented method of determining a reduced insurancepremium associated with a policy issued to a client by an insurer, themethod comprising: receiving, by at least one computer, a no-lapsediscount request or a no-lapse discount confirmation originating fromthe client, wherein the request or confirmation relates to a no-lapseperiod implemented in respect of the policy; receiving and/or accessing,by the at least one computer, policy data which includes client data andnon-client data relevant to the policy; and calculating, by a processorassociated with the at least one computer, a premium which covers a costof risk and a cost of expenses associated with the policy and allows fora predefined profit allocation, wherein the processor calculates thepremium based on the policy data and on the assumption that the policywill not be cancelled or allowed to lapse during the no-lapse period,and wherein the processor is configured to calculate the premium suchthat the cost of expenses and the predefined profit allocation for thepolicy are kept unchanged relative to another policy of the same typeissued by the insurer, but in respect of which a no-lapse period doesnot apply, thereby allowing the calculated premium to be reducedrelative to a premium associated with the other policy; and generating,by the at least one computer, output indicative of the calculatedpremium and transmitting the output to a communications deviceassociated with the client.
 2. The method according to claim 1, whereinthe no-lapse period is a fixed period in respect of which the client hasagreed not to cancel the policy or allow the policy to lapse, andwherein the client has agreed to a penalty being applied in response toa cancellation or lapsing during the no-lapse period.
 3. The methodaccording to claim 2, wherein the calculated premium applies only to theno-lapse period, the method further including re-calculating, by theprocessor, the premium for a subsequent period if the client agrees to afurther no-lapse period.
 4. The method according to claim 3, whereinre-calculating the premium includes updating, by the at least onecomputer, at least the policy data, the cost of risk and the cost ofexpenses, and calculating, by the processor, a premium which covers theupdated cost of risk and the updated cost of expenses and allows for apredefined profit allocation, wherein the processor calculates thepremium based on the updated policy data and on the assumption that thepolicy will not be cancelled or allowed to lapse during the no-lapseperiod.
 5. The method according to claim 1, which includes calculating,by the processor, a discount which can be offered to the client if theno-lapse period is applied, wherein the discount is taken relative tothe premium associated with the other policy in respect of which ano-lapse period does not apply, the method including generating, by theat least one computer, output indicative of the discount associated withthe calculated premium, and transmitting the output to thecommunications device associated with the client.
 6. The methodaccording to claim 5, wherein the processor is further configured toimplement an algorithm which utilises factors including one or more ofan age of the client, time until retirement of the client, cost ofexpenses, interest rate structure and lapse and claims experience, tosolve for the discount that can be offered to the client during theno-lapse period assuming no cancellation or lapsing.
 7. The methodaccording to claim 1, wherein the policy data includes data relating tolapse and claims experience, the processor being configured to take intoaccount changes, over time, in at least one client experience indicatorof the insurer based on the issuing of a plurality of similar policiesincorporating no-lapse periods, when calculating the premium.
 8. Themethod according to claim 7, wherein the at least one client experienceindicator includes indicators of lapse experience, cancellationexperience, mortality experience and/or morbidity experience, theprocessor being configured to analyse past experience data relating tothe client experience indicator/s and future experience data relating toexpected future changes in the client experience indicator/s in order tocalculate the premium.
 9. A system for determining a reduced insurancepremium associated with a policy issued to a client by an insurer, thesystem comprising at least one computer and a processor, the systembeing configured to: receive a no-lapse discount request or a no-lapsediscount confirmation originating from the client, wherein the requestor confirmation relates to a no-lapse period implemented in respect ofthe policy; receive and/or access policy data which includes client dataand non-client data relevant to the policy; and calculate, by theprocessor, a premium which covers a cost of risk and a cost of expensesassociated with the policy and allows for a predefined profitallocation, wherein the processor calculates the premium based on thepolicy data and on the assumption that the policy will not be cancelledor allowed to lapse during the no-lapse period, and wherein theprocessor is configured to calculate the premium such that the cost ofexpenses and the predefined profit allocation for the policy are keptunchanged relative to another policy of the same type issued by theinsurer, but in respect of which a no-lapse period does not apply,thereby allowing the premium to be reduced relative to a premiumassociated with the other policy; and generate, by the at least onecomputer, output indicative of the calculated premium and transmit theoutput to a communications device associated with the client.
 10. Thesystem according to claim 9, wherein the no-lapse period is a fixedperiod in respect of which the client has agreed not to cancel thepolicy or allow the policy to lapse, and wherein the client has agreedto a penalty being applied in response to a cancellation or lapsingduring the no-lapse period.
 11. The system according to claim 10,wherein the calculated premium applies only to the no-lapse period, thesystem being configured to re-calculate, by the processor, the premiumfor a subsequent period if the client agrees to a further no-lapseperiod.
 12. The system according to claim 11, wherein re-calculating thepremium includes updating at least the policy data, the cost of risk andthe cost of expenses, and calculating, by the processor, a premium whichcovers the updated cost of risk and the updated cost of expenses andallows for a predefined profit allocation, wherein the processorcalculates the premium based on the updated policy data and on theassumption that the policy will not be cancelled or allowed to lapseduring the no-lapse period.
 13. The system according to claim 9, whereinthe processor is configured to calculate a discount which can be offeredto the client if the no-lapse period is applied, wherein the discount istaken relative to the premium associated with the other policy inrespect of which a no-lapse period does not apply, the system furtherbeing configured to generate, by the at least one computer, outputindicative of the discount associated with the calculated premium, andto transmit the output to the communications device associated with theclient.
 14. The system according to claim 13, wherein the processor isconfigured to implement an algorithm which utilises factors includingone or more of an age of the client, time until retirement of theclient, cost of expenses, interest rate structure and lapse and claimsexperience, to solve for the discount that can be offered to the clientduring the no-lapse period assuming no cancellation or lapsing.
 15. Thesystem according to claim 9, wherein the policy data includes datarelating to lapse and claims experience, the processor being configuredto take into account changes, over time, in at least one clientexperience indicator of the insurer based on the issuing of a pluralityof similar policies incorporating no-lapse periods, when calculating thepremium.
 16. The system according to claim 15, wherein the at least oneclient experience indicator includes indicators of lapse experience,cancellation experience, mortality experience and/or morbidityexperience, the processor being configured to analyse past experiencedata relating to the client experience indicator/s and future experiencedata relating to expected future changes in the client experienceindicator/s in order to calculate the premium.